After a century in South Africa and creating a dynasty synonymous with diamonds, the Oppenheimers are selling their 40% interest in De Beers. Anglo American of London, U.K., has offered US$5.1 billion in cash. Anglo will then hold 85% of a company with the equivalent of a US$12.75 billion market cap.
De Beers was founded in 1888 by Cecil Rhodes (of the Rhodes Scholarship fame). The first Oppenheimer in South Africa, Ernest, discovered the Cullinan diamond mine in 1902 and operated independently until World War I when De Beers at last gained control of its rival. With the death of Rhodes in 1927, Oppenheimer became De Beers chairman, a position that vaulted his family into a world of unprecedented wealth and influence. The De Beers empire has grown beyond South Africa into Botswana, Namibia and Canada, where it operates the Victor mine in northern Ontario.
De Beers had for decades had a near-monopoly on the diamond trade. Now with increased competition from new producers in Canada, Russia, Australia and other nations on the African continent, the Oppenheimer family is bowing out.
That is out of the diamond business, but not out of Africa. In a recent interview with Mineweb.com, De Beers chairman Nicky Oppenheimer promised his family will remain in Africa and reinvest the billions it makes from the sale.
Oppenheimer also said talk of selling started less than four weeks ago when he met with Anglo chairman John Parker. The decision to sell may have been quick, but the closing of the deal could take nine months to a year. Anglo has many regulatory hurdles to clear before the deal can close.
There has been some recent speculation among investors that De Beers would be taken public. Not so, says Anglo CEO Cynthia Carroll. She is confident that her company has the financial, technical, operation and exploration expertise to grow De Beers’ share of the diamond market.
Without the Oppenheimers, the diamond industry turns a page on a colourful chapter of its history..